OCIO Conflicts of Interest: Fee Fiddles and Performance Puffery

OCIO Selection
Industry Resources
AlphaWeek/Strategic Investment Group
| August 07, 2019

The chief responsibility of an OCIO is to act as a trusted advisor and a co-fiduciary. Alignment, trust, transparency, and a spirit of partnership are critical ingredients of a successful OCIO relationship. It is therefore essential that institutional investors carefully consider the degree of alignment and potential conflicts of interest of candidate OCIOs.

Regrettably, the alignment of many OCIOs with their prospective clients is compromised by inherent conflicts of interest. Worse still, some OCIOs engage in troubling sleights of hand to win business. Conflicts of interest and sleight of hand tricks are incompatible with the alignment, trust, and spirit of partnership essential to the co-fiduciary role an OCIO should play. These issues can lead to misleading representations of two key factors scrutinized by investors when selecting an OCIO: performance, and fees.

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